Court of Appeals orders govt to pay Piatco $371M

THE Court of Appeals (CA) on Thursday ordered the government to pay the Philippine International Air Terminals Co., Inc. (Piatco) $371 million for the construction of the Ninoy Aquino International Airport (NAIA) Terminal 3.

In a 31-page decision penned by Associate Justice Apolinario Bruselas, Jr. and concurred in by Associate Justices Rebecca De Guia-Salvador and Samuel Gaerlan, the CA modified the 2011 ruling of the Pasay City Regional Trial Court (RTC) Branch 117 awarding just compensation to Piatco in the amount of $175.79 million, which is less than the P3 billion or $59.44 million already paid to Piatco in compliance with a Supreme Court (SC) ruling in 2004 that it had to be paid first for building the terminal before its actual takeover could proceed.

“Just compensation is fixed at US$300,206,639.00 less US$59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00 with legal interest at 6% computed as above. The Republic is thus ordered to pay Piatco just compensation as herein determined and which sum has reached the total of US$371,426,688.24 as of 31 July 2013,” the CA ruled.

The net just compensation for Piatco was placed by the lower court at $ 116.35 million, minus any award of interest for government’s delay in paying the builder.

But the CA set aside the RTC ruling, saying that it is “fully cognizant of the reality that whatever just compensation may be awarded will surely impact on the citizenry, but it cannot also simply balance away the right of the individual property owner on this score alone.”

“To arrive at just compensation, we (CA) simply put in the figure determined as replacement cost, which is $300,206,693 and factor in law and equity . . . that interest should be imposed on the amount due Piatco,” the court said.

“Simple economic logic dictates that the replacement cost can never be lower than the construction cost at the time the structures were built.”

The CA did not agree with the RTC in citing deterioration of the property and costs for non-compliance with contract specifications in making deductions from the payment for Piatco. The contract to build the terminal was awarded to Piatco and its German partner Fraport in 1997.

The appellate court said there was no clear evidence of any massive structural defect of the project.

“What may have been considered as a manifestation of a structural defect was the much publicized collapse of a portion of the ceiling which coincidentally occurred just before the equally publicized ocular inspection of the NAIA Terminal 3 premises. The ceiling collapse, however, pertains more to a ‘finishing’ issue than a structural one,” it said.

“Thus, a building might look ugly, worn out or deteriorated and dilapidated, but it does not necessarily mean that it is unsound. Structural defect in construction lingo relates to the very integrity and stability of the completed building itself,” the court added.